PRESSURE from the Financial Regulator forced EBS Building Society and its broker division, Haven, to tighten their lending criteria for first-time buyers, it has been learned.
Earlier this month EBS and Haven said they would stop lending money for the purchase of apartments outside cities and commuter-belt locations.
The building society also changed its rules on the amount of income it will take into account when assessing mortgage applicants.
Now the Irish Independent has learned that staff from the regulator's office told EBS and Haven that the group was lending too much -- especially to those on lower incomes -- and told it to tighten its criteria.
It is understood that there was concern the group, as a small lender, was gaining too great a share of a shrinking mortgage market.
There were also concerns about its "risk appetite" for the first-time buyer segment of the mortgage market.
This is particularly the case at a time when house prices continue to fall while unemployment is still rising.
EBS, AIB and Bank of Ireland are regarded as the only three lenders in the market prepared to advance mortgages to first-time buyers.
But now EBS/Haven has scaled back the amount of a mortgage applicant's income it will accept as the basis for calculating how much it is prepared to lend.
The building society has altered its lending criteria in a number of ways, including changes to the amount of income it will take into account when assessing mortgage applicants, as first revealed by this newspaper.
For someone with an income of €40,000, the lender will only advance them a mortgage amount where the repayments do not exceed 30pc of their disposable (or after-tax) income. This is because the lender is forcing them to set aside more money for living expenses.
EBS and Haven will now only take account of 75pc of the second income when a couple jointly apply for a mortgage.
But the most controversial change, forced on the group by the regulator, affects apartment purchases.
If the apartment is in a major city like Dublin, Limerick, Cork or Galway, EBS will lend up to 85pc of an apartment's value.
If it is in a commuter-belt town -- like Navan, Co Meath or Newbridge, Co Kildare -- EBS will lend up to 80pc.
But if the apartment is not in one of these categories, the application will not even be considered.
Other lenders had stopped funding apartment purchases in rural areas already.
EBS head of membership Dara Deering denied the building society was put under pressure to change its lending criteria by the regulator.